UPDATE 4-Delphi deal said near as UAW contract talks loom

(Adds more details from source, updates stock price)

By Jui Chakravorty

DETROIT, June 14 (Reuters) - General Motors Corp. (GM.N) and bankrupt auto parts maker Delphi Corp. (DPHIQ.PK) are "very close" to a deal with the United Auto Workers union that would help the supplier emerge from bankruptcy, a source familiar with the situation said on Thursday.

The deal, which could be reached within a week, would include GM providing a one-time cash payout to Delphi workers in exchange for lower hourly wages, said the source, who asked not to be named because the talks are sensitive.

GM and the UAW declined comment.

Delphi spokesman Lindsey Williams said: "It suffices to say that we are still working on it."

Separately, the Detroit News reported that the deal would offer 4,000 UAW workers a cash payment in return for accepting lower wages that could range from $14 to $18 per hour. The amount of the cash payment was not specified.

Workers could also take the lump sum and accept early retirement or return to GM, the newspaper said, quoting people familiar with the talks.

Shortly after it filed for bankruptcy protection, Delphi said hourly wages were about $27 and in March 2006 it proposed a reduction in wages to $16.50 per hour with a $50,000 wage buy-down payment.

A Delphi settlement would remove a major uncertainty for GM, which next month begins its own contract talks with the UAW. GM and other automakers will be seeking deep concessions intended to bring their labor costs in line with rivals such as Toyota Motor Corp. (7203.T).

GM has estimated its financial exposure from the Delphi restructuring at $7 billion and said it could take a charge of $1 billion this quarter related to the costs of a settlement.

The continuing impasse at Delphi has been seen as a major risk to GM because a work stoppage at the company, which remains GM's largest parts supplier, has the potential to shut down production at the automaker.

GM shares closed at $33.60, up $1.50 or 4.67 percent, in Thursday trade on the New York Stock Exchange.

Delphi, which filed for bankruptcy protection in October 2005, has been in talks with its unions and GM over agreements needed to complete a recapitalization plan and emerge from bankruptcy.

The Troy, Michigan-based parts maker reached agreements with its unions and GM on buyouts last year that allowed about 20,000 U.S. unionized hourly workers to leave Delphi.

Contracts covering the wages of remaining workers, and more recently hired replacements, have proved to be a bigger hurdle. (Additional reporting by Kevin Krolicki in Detroit, Nick Zieminski in New York and David Bailey in Chicago)